Matiang’i rules out Safaricom reprieve from licence terms

Mergers, Acquisitions and Financial Results

ICT secretary Fred Matiang’i has vowed to tie the renewal of Safaricom’s licence to the voice quality checks that show the mobile phone operator is non-compliant.

Dr Matiang’i said the government and the Communications Commission of Kenya (CCK) will not negotiate on the voice quality standards. The communication regulator found that all the four mobile phone operators, including Safaricom, Airtel, Orange and Yu had failed to meet minimum quality of service standards in the year to June.

It has tied the renewal of Safaricom’s licence, which is due before June, to paying Sh2.3 billion and achieving the voice tests— a condition the Nairobi bourse- listed telecom operator has termed as punitive.

“I don’t understand why an operator would like to negotiate a licence condition. There are only two options here, either comply or step out of the business,” Dr Matiang’i told the Business Daily on the sidelines of the launch of the electronic filling of returns by insurers to the Insurance Regulatory Authority.

“I am happy with what CCK is doing and we (the ministry) are in full support of their efforts to ensure that all operators comply with the rules. We are going to act according to the law to ensure that the operators meet licensing conditions.”

The government owns a 35 per cent stake in Safaricom, Vodafone (40 per cent) and remaining 25 per cent is held by investors at the Nairobi bourse.

The CCK expects the operator to achieve a score of 80 per cent on the eight indicators including speech quality, completed calls, call success rates and call drop rate.

Safaricom, Airtel and yuMobile tied on a score of 50 per cent in the year to June while Telkom Kenya had a 62.5 per cent mark.

In 2012, Safaricom had the worst score of 50 per cent while Airtel was rated at 62.5 per cent. Telkom and Essar both achieved 87.5 per cent.

CCK attributed the drop in performance to the enhancement of the weight of the eight indicators including speech quality, completed calls, call success rates and call drop rate.

“The current assessment framework uses the enhanced KPIs that were applicable three years after the adoption of the framework,” says the CCK.

Safaricom has previously questioned the CCK indicators, terming them erroneous, adding that an independent report based on international benchmarks had given it a clean bill of health.

The operators are currently fined Sh500, 000 for breach of the quality of service standards and the State is looking to raise the fines, saying the current penalty is too lenient and has failed to make the operators comply. The fine accounted for a tiny fraction of Safaricom’s Sh124 billion sales in the year to March.